Lecture 5: IS-LMLMISSlide 4IS-LM ModelLecture 5: IS-LM•Find equilibrium (Y,i)•LM•IS•IS-LMLM**LMYMiiMd(Y0)Md(Y1)Y0Y1i0i1A) Expansionary Monetary Policy; B) Y2kISOLD: Y = C(Y-T) + I + G I = I(Y,i) + -IS: Y = C(Y-T) + I(Y,i) + GWhy IS?ISISYY0 Y1i1i0Z(i0)Z(i1)A) Fiscal Policy; B) “Optimism”IS-LM ModelYiISLMA) Fiscal policy; B) Monetary policy; C) MixParameters (slopes): L’ ; I_i;
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